One of Britain's biggest builders, Barratt Developments, unveiled today what it said was the UK's first zero-carbon house built by a volume house builder.

Developed at the Buildings Research Establishment in Watford, Barratt's Green House is packed with the latest technology including solar panels, rain water harvesting and an air-source heat pump.

Its new kind of concrete walls and floors, combined with super insulation and triple-glazed windows makes it airtight, meaning the requirement for heating is minimal. Fresh air entering the passes through a heat exchanger, which transfers the heat from the outgoing stale air and puts it back into the house. A rainwater harvesting system collects water for use in flushing toilets.

House builders in the UK will be forced by government legislation to build only zero-carbon houses from 2016 onwards but, given the long lead times in the industry, they are already trying to meet that target.

Barratt chief executive Mark Clare said it would not be easy to reduce the cost of the prototype to commercial levels but was confident it could be done. The important thing, he added, was to build houses people would buy.

"We cannot and will not build houses that do not appeal to consumers. But they must also be affordable," he said, adding he was confident the new house would be accepted by buyers after winning 22,000 votes from the public in a competition in 2007.

Housing minister Caroline Flint said: "Our goal is to build not just more homes, but better homes. That's why all new homes must be zero carbon from 2016, with progressively tougher standards being introduced over the coming years."

Barratt's new home achieves code level 6, which is the top grade, awarded to competely zero-carbon homes.

Earlier this week the UK Green Building Council released a report defining in detail when a house can be called zero carbon. This is likely to form the basis of forthcoming legislation from the government.

House builders had been unhappy at the added construction costs of going zero carbon and had wanted to be able instead to invest in off-site renewable energy, such as wind turbines, which would be cheaper. But the government is likely to endorse the GBC proposals that a zero-carbon house must produce almost all its energy on-site or very nearby in, say, a communal heat and power system.

Barratt plans to roll out its zero-carbon homes on the site of Hanham Hall hospital near Bristol. It will build 200 of them, a third of which will be affordable by lower income buyers. All will be code level 6 and will completed in 2011, five years ahead of the 2016 deadline.

The Barratt house makes no use of gas. The air-source heat pump is powered by electricity produced over the year by the solar photovoltaic cells on the roof. Hot water comes mainly from a solar thermal panel on the roof, backed up in winter by the heat pump. Automatic shutters slide across the windows to prevent the house getting too hot in the summer, although you can manually override them.

Andrew Sutton from the architects Gaunt Francis, which designed the house, acknowledged that the heavy use of concrete in the house released some carbon in its manufacture, but he said it gave the houses excellent "thermal mass" and would last well over a hundred years, meaning the building's lifetime carbon footprint would be extremely low.

To encourage take up, zero-carbon homes costing up to £500,000 will be free of stamp duty until 2012. Those over £500,000 in price will get a stamp duty discount of £15,000.